With gas prices on the rise, members of Congress have renewed calls for a “windfall profit” taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on U.S. oil companies. However, previous Tax Foundation research cautions against these taxes, illustrating that they are both economically harmful and a poor revenue source.
“America’s last experiment with windfall profits taxes in the 1980s proved to be economically harmful,” said staff economist Jonathan Williams. “The tax not only failed to raise a fraction of the revenue forecasted, but also stunted domestic oil production.”
For previous research on windfall profits, please see the following:
Tax Foundation Commentary and Op-Eds
- Crude Economics: Windfall Profits Taxes Hurt Consumers at the Pump
- The Windfall Profit-Taxers Are Back
- Who Profits at the Pump?
- Audio Commentary: Are Windfall Profits Taxes Good Economics”?
- The Consequences of a Windfall Profits Tax
- Windfall Taxes Hit Retirees Hard
- Windfall Profits Taxes A Good Revenue Source?
- Nobel Laureate Thomas Schelling on Windfall Profit Taxes
Tax Foundation Analysis and Studies
- Oil Company Profits and Tax Collections: Does the U.S. Need a New Windfall Profits Tax?
- Large Oil Industry Tax Payments Undercut Case for Windfall Profits Tax
- State and Federal Treasuries “Profit” More from Gasoline Sales than U.S. Oil Industry
- The Oil Excise Tax: Another Government Windfall
- Impact of the Excess Profits Tax of 1952
- Financing Defense: Is An Excess Profits Tax the Solution?
- Excess Profits Taxation: A Compilation of Materials on Excess Profits Taxation
Studies from Other Organizations
- Salvatore Lazzari, “The Windfall Profit Tax on Crude Oil: Overview of the Issues.” Congressional Research Service Report for Congress (September 12, 1990).
For more on gas prices and taxes, please visit our Gasoline Taxes section.Share